Mr. Peter Marrone reports

YAMANA ANNOUNCES COPPER PURCHASE AGREEMENT IN RELATION TO FUNDING ITS RIACHO DOS MACHADOS ACQUISITION

Yamana Gold Inc. has entered into a copper purchase agreement with Altius Minerals Corp., pursuant to which Altius will pay Yamana total advanced payments of $60-million in cash consideration plus 400,000 Altius warrants. The copper purchase agreement provides Altius with the right to receive payments of copper related to production from the company's Chapada mine in Brazil. A non-refundable deposit of $8-million has been paid to Yamana in consideration of the copper purchase agreement with the balance of the advanced payment owing and the Altius warrants expected to be received on May 3, 2016. Altius will only be entitled to receive payments of copper subject to the balance of advanced payment being paid in full. (All amounts are expressed in U.S. dollars unless otherwise indicated.)

Concurrently with the copper purchase agreement, the company has completed the purchase of all rights and interests of Macquarie Bank Ltd. in certain project loan facilities, gold purchase agreements, related guarantees and security entered into with Mineracao Riacho dos Machados Ltda. (MRDM). MRDM is the owner of the Riacho dos Machados gold mine in Minas Gerais state, Brazil (RDM). This transaction is one of several agreed-upon steps toward the company's Brio Gold division's acquisition of RDM. Total consideration for this transaction is approximately $48.5-million, net of closing adjustments and inclusive of transaction expenses, which are approximately $3-million less than previously announced. It is currently anticipated that the final acquisition of RDM through an agreed-upon restructuring procedure will close in May, 2016. Any economic benefit relating to RDM will accrue to Brio Gold, effective March 31, 2016.

The copper purchase agreement has been entered into to finance the purchase of RDM. The copper purchase agreement is one of various alternatives the company evaluated to finance the ultimate acquisition of RDM. The copper purchase agreement deleverages the company's exposure to copper, a secondary metal, to increase exposure to gold, the company's primary metal, and increase the potential intrinsic value of the Brio Gold division.

Peter Marrone, the company's chairman and chief executive officer, provided a comment as follows: "The copper purchase transaction will allow us to complete a highly accretive acquisition of an asset that is strategic to and improves our Brio Gold division. It is a low-cost alternative means to finance that acquisition. It will also increase gold exposure while reducing our copper exposure. We will be significantly increasing potential future cash flow from gold for a modest reduction in future cash flow from copper. Proceeds from the copper purchase transaction that are not applied to the acquisition will increase cash balances and reduce net debt."

By completing the copper purchase agreement at the same time as completing the acquisition of Macquarie's interest in MRDM, for almost the same consideration, in the short to medium term, the company is effectively swapping approximately three million pounds of annual copper production for 100,000 ounces of annual gold production. The short-term cash flow accretion is expected to be significant.

With the completion of the acquisition of RDM, Yamana will own three producing mines in its Brio Gold division with a combined initial annualized production at full capacity of approximately 250,000 gold ounces, which would further increase to approximately 350,000 gold ounces assuming the recommissioning of C1 Santa Luz, at an all-in sustaining cost of approximately $800 per ounce. For 2016, the Brio Gold division's consolidated production is expected to be at least 180,000 gold ounces, including expected attributable production of approximately 30,000 gold ounces from RDM, with annual production of 250,000 gold ounces beginning in 2017, which would be RDM's first full year of production. Alternatives for financing the recommissioning of C1 Santa Luz will be evaluated once certain pending technical evaluations are completed, although one available alternative would be for the Brio Gold division to self-finance that recommissioning with cash flow generated from its three producing mines beginning in 2017.

Terms of the copper purchase agreement

The general terms of the copper purchase agreement are outlined as follows:

• Yamana will receive total consideration of approximately $61-million consisting of:
  • An $8-million non-refundable cash deposit, which was paid on March 31, 2016;
  • A $52-million cash payment payable on May 3, 2016;
  • Altius warrants with a strike price of $14 (Canadian) and a term of five years to be issued on May 3, 2016.
• Altius will pay 30 per cent of the spot price per pound of copper at the time of metal delivery.
• Delivery of copper with the first targeted payment on July 5, 2016, will be 3.70 per cent of payable copper referenced from Chapada, subject to the following conditions:
  • A 1.05-per-cent reduction to the base rate to the lower rate of 2.65 per cent of payable copper if a specified expansion of Chapada occurs. This rate decrease will be deemed effective at such time as throughput increases to an annualized run rate of more than 26 million tonnes for a period of 150 days with a corresponding increase in copper production from a base rate for copper production of not less than 33 per cent;
  • A reduction to a tail rate of 1.5 per cent of payable copper once total payable copper delivered to Altius reaches 75 million pounds.

We seek Safe Harbor.